There are so many ways to sell on Amazon. Many Amazon sellers engage in retail arbitrage, which means that they are buying from retail operations and then selling the products on the Amazon marketplace for a profit. Others sell private label, which means that they find manufacturers to make products comparable to those that are already in demand. Private label sellers purchase the products from the manufacturer and sell them on Amazon under their own brand name.
In addition to these popular selling options, selling wholesale is another option. This means that you purchase merchandise directly from the manufacturer, then resell the products to Amazon shoppers at a marked up price.
To do this, you will need to focus your energy sourcing merchandise and forming a relationship with manufacturers to get the best terms possible.
Selling wholesale is different from retail arbitrage because you tend to deal with just a manufacturer or two versus trying to source from anywhere you can when arbitraging. And unlike with private label selling, you have no control over the production of the merchandise. The manufacturer produces their products on their own terms because that is their brand.
Advantages to wholesale selling on Amazon
Selling wholesale offers a number of benefits. First, your growth opportunity is scalable, meaning you have a chance to generate more revenue while continuing to minimize costs. You can also maintain full control over warehousing, packing, and shipping of the merchandise if you choose to, or you can sell through Fulfillment by Amazon.
Another perk of selling wholesale is having brand recognition. Since you are already working with an established brand name, you won’t have to build a following. Also, you won’t have to deal with ongoing changes in manufacturer’s pricing, meaning you can sell major name brands in a way that you might not be able to with retail arbitrage.
Disadvantages to wholesale selling on Amazon
Wholesaling on Amazon is not without its drawbacks. The first challenge you may face is finding a manufacturer that doesn’t already sell their product on Amazon. Even if you can find a manufacturer, you will also need to jump through the necessary hoops to set up wholesale accounts. In addition to that, the original cost of setting up a warehouse/storage could be prohibitive, and you can expect lower profit margins on your sales; however, you can expect to sell a lot of merchandise.
If you find retail arbitrage to be a drag on your time and energy, consider selling wholesale on Amazon. While profit margins may vary when compared to that of retail arbitrage, you can often make up for it with higher, more consistent order quantities.
If you need help deciding on a sales model or developing winning Amazon brand management strategies, contact WishingUWell.